Down Payment

Deciding how much of a down payment to make on your home can be daunting. On the one hand, you want to put a much down as possible, because you're going to be paying the mortgage for thirty years (or at least fifteen). Yet you don't want to put down so much that you have to borrow Uncle Earl's pickup truck to move yourself, or you can't afford to plant any bulbs in your new garden. Figure your moving and closing costs carefully, then add a 'fudge factor' of 10-15% for things like dinner out because you can't find the box that holds the pots and pans. Don't put down so much that you're 'house poor,' but make that down payment as big as you can to keep the mortgage reasonable. If you put down 20% of the purchase price or more, you'll qualify for the best mortgage rate (all else being equal) and you won't have to pay Private Mortgage Insurance (PMI).

Mortgage Insurance

If you are putting down a down payment of less than 20% of the selling price of your hew home, your mortgage lender will almost certainly require private mortgage insurance (PMI). This monthly cost will be added to your mortgage payment, and it protects the lender if you default on your mortgage. If you are paying mortgage insurance, once you have at least 20% equity in your home, you are eligible to stop paying mortgage insurance. Typically, you must request that your mortgage insurance be discontinued, and your lender may require a new appraisal to verify that you now owe 80% or less of the home's value. For more information on mortgage insurance and LTVs, visit Bankrate.com. The site offers a wealth of information on mortgages, including a variety of mortgage calculators.